Financial data firm S3 Partners released a note on Monday analyzing the recent surge in meme stocks, stating, “The meme trade is back.”

Meme stocks like GameStop (NYSE:) and AMC Entertainment (NYSE:) saw significant price increases on Monday. GME surged early, rising 74%. AMC jumped 78%. S3 also notes that Trump Media & Technology Group (DJT) rose in early Monday trading, before closing over 1% higher.

S3 Partners’ note dives into the impact on short sellers. GME’s short interest sits at $1.13 billion, with 64.49 million shares shorted. This year, there has been a slight increase in short selling for GME. However, despite initial profitability, short sellers are facing losses.

According to S3 Partners, GME short sellers were up for the first four months of 2024, but Monday’s price movement resulted in an estimated $838 million mark-to-market loss. May alone has seen GME short sellers lose $1.24 billion year-to-date.

S3 Partners identifies GME as a prime candidate for a short squeeze. The note also points out that today’s losses will likely pressure some short sellers to exit, potentially leading to further buying and higher prices. However, S3 Partners also expects new short sellers to enter the market.

A similar situation is unfolding for AMC and DJT. S3 Partners expects squeezes to occur in both stocks, followed by an influx of new short sellers.

“DJT’s mark-to-market losses coupled with its high stock borrow rates of 250-300% fee make it a very squeezable stock,” states the firm. “DJT short sellers have been taking combination blows of sky-high financing costs coupled with large mark-to-market losses and we’ve been seeing over a million shares of buy-to-covers over the last week. More DJT shorts will be squeezed out of their trades if its stock price continues to climb.”

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“The meme trade is back, and short sellers in stocks like GME, AMC, and DJT will be teetering on the short squeeze cliff as their stock prices surge,” adds the firm. “Crowded stocks with mark-to-market losses are targets for short squeezes and these three stocks fit the bill.”

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